Katopothis v. Windsor-Mount Joy Mut. Ins. Co.
| Decision Date | 31 July 2018 |
| Docket Number | No. 16-7132,16-7132 |
| Citation | 897 F.3d 291 |
| Parties | Vasilli KATOPOTHIS and Francesca Dahlgren, Appellants, v. WINDSOR-MOUNT JOY MUTUAL INSURANCE CO. and R.W. Home Services, Inc., doing business as Gale Force Cleaning and Restoration, Appellees. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Glenn H. Silver was on the briefs for appellants. Erik B. Lawson entered an appearance.
George D. Bogris was on the brief for appellee R.W. Home Services, Inc., d/b/a Gale Force Cleaning and Restoration.
Charles B. Peoples was on the brief for appellee Windsor-Mount Joy Mutual Insurance Co.
Before: Griffith and Kavanaugh,* Circuit Judges, and Sentelle, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge Griffith.
Vasilli Katopothis and Francesca Dahlgren (the "Dahlgrens") own a beach home that flooded in a plumbing accident while they were away. They sued their insurance company for breach of contract when it refused to cover the damage. They also sued their cleaning-and-restoration company for failing to adequately remedy the damage and prevent mold. The district court granted summary judgment in favor of the insurance company based on the plain language of the Dahlgrens’ insurance policy and transferred the claims against the cleaning-and-restoration company to the district court in Delaware for lack of personal jurisdiction. We affirm both the grant of summary judgment and the transfer of the claims.
In May 2000, the Dahlgrens, who reside in the District of Columbia, purchased a beach home in Rehoboth Beach, Delaware, where they spend most of their weekends. At all times relevant to this litigation, the house was a second residence and remained fully furnished with the accessories of daily life, such as furniture, clothes, food, toiletries, and medicine. When not at their beach home, the Dahlgrens routinely left the heat on to prevent the pipes from freezing and asked a friend to check on the house and retrieve the mail. They did not, however, shut off the water supply.
In February 2013, Ms. Dahlgren returned to the beach home to find two inches of standing water throughout the main level and additional water "gushing" from the ceiling overhead. The Dahlgrens had been away for ten days, and, in their absence, a pressurized hot water pipe in the upstairs bathroom had separated at the joint and flooded the house.
The Dahlgrens notified their insurance company, Windsor-Mount Joy Mutual Insurance Co. ("Windsor-Mount"), about the flooding. They also contracted with R.W. Home Services, Inc., doing business as Gale Force Cleaning and Restoration ("Gale Force"), to remedy the damage and prevent mold. According to the Dahlgrens, Gale Force was negligent in its clean-up effort and mold spread through the house, so the Dahlgrens eventually decided to tear it down and build a new one.
The Dahlgrens timely filed an insurance claim with Windsor-Mount to cover the damage from the accident. The insurance company denied the claim because, while they were away, the Dahlgrens had failed to shut off the water where it entered the house.
The Dahlgrens sued Windsor-Mount for breach of contract. They filed suit in the Superior Court of the District of Columbia, but Windsor-Mount invoked federal diversity jurisdiction and removed the case to the district court. See 28 U.S.C. §§ 1332(a), 1441(a). When Windsor-Mount impleaded Gale Force as a third-party defendant, the Dahlgrens amended their complaint to add claims against Gale Force as well for breach of contract, negligence, negligent misrepresentation, and violations of the Delaware Consumer Fraud Act, 6 Del. Code §§ 2511 -27. The Dahlgrens and Windsor-Mount then filed cross-motions for summary judgment, and Gale Force moved to be dismissed from the case for lack of personal jurisdiction.
The district court determined that the Dahlgrens could not recover under the clear terms of their insurance policy and granted summary judgment against them on that issue. See Katopothis v. Windsor-Mount Joy Mut. Ins. Co. , 211 F.Supp.3d 1, 14-21 (D.D.C. 2016). While the Dahlgrens argued that Delaware law should apply and Windsor-Mount argued for District of Columbia law, the district court was not put to the choice because the insurance claim failed under the law of both jurisdictions. See id. at 13-14 ; see also City of Harper Woods Emps.’ Ret. Sys. v. Olver , 589 F.3d 1292, 1298 (D.C. Cir. 2009) ; USA Waste of Md., Inc. v. Love , 954 A.2d 1027, 1032 (D.C. 2008) ().
Concluding the Dahlgrens did not allege sufficient contacts between Gale Force and the District of Columbia to establish personal jurisdiction, the district court also transferred the Dahlgrens’ claims against Gale Force to the district court in Delaware, where they have been stayed pending the outcome of this litigation. Katopothis , 211 F.Supp.3d at 21-27 ; see 28 U.S.C § 1406(a) ; Sinclair v. Kleindienst , 711 F.2d 291, 293-94 (D.C. Cir. 1983) ().
The Dahlgrens appeal, arguing the district court misconstrued their insurance policy under Delaware law and erroneously transferred the claims against Gale Force. We uphold the district court on both issues. And because we conclude the Dahlgrens’ claim against Windsor-Mount fails under Delaware law, and the Dahlgrens do not appeal the judgment of the district court with regard to District of Columbia law, we do not need to consider the choice-of-law analysis further. See USA Waste of Md. , 954 A.2d at 1032.
The district court had diversity subject-matter jurisdiction over this case pursuant to 28 U.S.C. § 1332(a). The Dahlgrens are citizens of the District of Columbia and allege $800,000 in damages; Windsor-Mount is a Pennsylvania corporation with its principal place of business in Pennsylvania; and Gale Force is a Delaware corporation with its principal place of business in Delaware. We have jurisdiction over this appeal pursuant to 28 U.S.C. § 1291 and review de novo issues of contract interpretation, the grant of summary judgment, and challenges to the exercise of personal jurisdiction. Bode & Grenier, LLP v. Knight , 808 F.3d 852, 857, 862 (D.C. Cir. 2015) (); FC Inv. Grp. LC v. IFX Mkts., Ltd. , 529 F.3d 1087, 1091 (D.C. Cir. 2008) (personal jurisdiction).
The Dahlgrens’ homeowners insurance policy is a twenty-seven page standard contract produced by the American Association of Insurance Services. It provides coverage for damage to both real and personal property resulting from accidental discharge or leakage from the plumbing, subject to specific exclusions. The cover page of the policy also lists a number of endorsements included with the standard contract to amend the terms of coverage. ML-508D is one of those endorsements.
ML-508D was approved by the Delaware Insurance Commissioner and printed on a blue sheet of paper to stand out from the rest of the policy.
It reads in full:
In other words, when the house remains unoccupied for more than 72 hours, the homeowner must either leave the heat on and shut off the water where it enters the house or shut off the water where it enters the house and drain any remaining liquid from the plumbing. Otherwise, ML-508D voids coverage for any damage caused by plumbing discharge, leakage, or overflow.
According to Delaware law, "[W]here the language in insurance contracts is unambiguous, the language is given its plain and ordinary meaning." Bermel v. Liberty Mut. Fire Ins. Co. , 56 A.3d 1062, 1070 (Del. 2012). An ambiguous insurance policy "is typically construed against the drafter and in accordance with the reasonable expectations of the insured." Id. ; see also O’Brien v. Progressive N. Ins. Co. , 785 A.2d 281, 288 (Del. 2001) ; Penn. Mut. Life Ins. Co. v. Oglesby , 695 A.2d 1146, 1149-50 (Del. 1997). But "a contract is only ambiguous when the provisions in controversy are reasonably or fairly susceptible to different interpretations" and "not ... simply because the parties do not agree on the proper construction." O’Brien , 785 A.2d at 288. Therefore, "[W]here the language of a policy is clear and unequivocal, the parties are to be bound by its plain meaning." Id.
The Dahlgrens cannot recover under the clear and unambiguous terms of their insurance policy. If their house remained unoccupied "in excess of 72 hours," the Dahlgrens were required to "[m]aintain heat in the residence and shut off the water supply where it enters the residence," or else the plain language of ML-508D excludes coverage for "loss caused by ... discharge, leakage, or overflow from any plumbing ... system." There is no dispute the Dahlgrens were...
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